The sudden death of the Swiss franc ceiling set off fears that other fixed exchange rates could be next. But Hong Kong’s storied peg with the U.S. dollar is as solid as ever.

Superficially, Hong Kong faces a similar situation to Switzerland. The
Swiss National Bank
was buying huge volumes of euros to hold down the franc, swelling reserves and leading to rapid money creation. There was little inflation, but worrying froth in the Swiss property market. Imminent quantitative easing by the European Central Bank added to the pressure.

Hong Kong’s peg to the U.S. dollar has similarly forced the territory to import ultra-loose monetary policy from the U.S. Rock bottom interest rates in Hong Kong fueled surging property values. Critics have gone so far as to blame the peg for youth dissatisfaction in the streets.

Some investors think Hong Kong could follow the Swiss. There was a surge in the volatility of Hong Kong dollar options the day after the SNB’s move and the spot price of the Hong Kong dollar has moved toward the strong side of its narrow trading band.

But comparing the franc to the Hong Kong dollar is like putting a square peg in a round hole. The SNB’s franc ceiling was a discretionary move undertaken for a few years by a central bank that viewed the policy as one of its tools among many.

Hong Kong’s currency board, by contrast, is an institutionalized, rules-based system in place since 1983, making it harder and even riskier to change on a whim.

What’s more, while the SNB was facing a coming flood of euro liquidity, Hong Kong is now likely to see a receding tide of dollars. The Federal Reserve has stopped asset purchases and will eventually raise interest rates, letting some air out of the Hong Kong property market.

If anything, pressure on the Hong Kong currency may soon turn in the opposite direction. If the Fed keeps tightening and the U.S. dollar continues to strengthen even as China’s economy slows, speculators could start betting on devaluation.

Not that they will succeed. Hong Kong authorities have been willing to take huge levels of pain to maintain the peg. They allowed GDP to contract by 5.9% in 1998 rather than succumb to depreciation pressure. And with the domestic political situation still unsettled, Hong Kong is unlikely to abandon a policy that has anchored the financial system for decades.

In the very long term, switching the peg from the greenback to the Chinese yuan is possible. But that can only happen once the Chinese currency is a freely convertible international one, which it won’t be for the foreseeable future. Traders buying call options on the Hong Kong dollar hoping for Swiss-like capitulation should find better uses for their money.